Approximately 78 million working Americans are currently working jobs that do not provide them with a retirement plan; however, Barack Obama is looking to change this predicament, according to a report by CNNMoney.com.
Recently while campaigning, Sen. Obama proposed that companies establish and automatically enroll workers in IRA-type savings plans where employees would deposit 3% of their salary for retirement, most likely into a low-cost index mutual fund. Unless an employee decides to opt-out, the government would match a portion of the money contributed, up to $500 for families that earn less than $75,000.
These steps will put a secure retirement within the reach of millions of Americans, said Obama last Friday in an Ohio campaign speech.
According to the Tax Policy Center, a nonpartisan policy institute in Washington D.C., Obamas proposal could cost the federal government upwards of $18.8 billion annually. These IRAs could potentially mature into considerable six-figure accounts, given strong average rates of return after inflation, yet some remain hesitant about the notion of automatic enrollment.
For Obama to make it mandatory doesnt work for me because it doesnt work for a lot of my employees who just dont want to participate, said Douglass Henry Jr., a chief executive of Henry Molded Products.
On the Republican side of things, John McCains senior policy advisor Douglas Holtz-Eakin said that the presumptive Republican nominee plans on unveiling a detailed stance on this issue of retirement savings later on in the summer.
Currently, McCain supports payroll deduction for workers without 401(k)s and he also backs auto-enrollment for individuals with 401(k)s.